“Made a lot of enemies”: what made the head of the NBU Valery Gontareva

“Made a lot of enemies”: what made the head of the NBU Valery Gontareva

“Mission accomplished”

One of the few women in the world, governing the Central Bank, Valeriya Gontareva, on 10 April announced that resigns from the post of head of the National Bank of Ukraine (NBU) “on their own”. “I consider my mission fully accomplished. Reform done,” she explained at a special press conference.

The resignation of Gontareva was not a surprise: in February, she spoke about her intention to the President of Petro Poroshenko and the head of the IMF, Christine Lagarde, said the Ukrainian edition “Mirror of week”. Against Gontareva was conducted public “bullying” of a custom character, said the Poroshenko administration, and the last straw could be the campaign of Ukrainian nationalists from the party “national corpus”, when they are brought to the entrance of the NBU, the coffin with the dummy representing the head of the Central Bank. “You’ve seen these rally near my house. Saw these coffins with my head in the National Bank. I’m not the police, I can’t stop it”, — quotes Gontareva, Ukrainian financial portal “MinFin”.

“Cleanup of the financial system produced, the last tranche of the IMF obtained, reached an agreement on a successor (his name is yet to be announced, the decision of Poroshenko. — ) so, the decision to leave, especially since the head of the national Bank of Ukraine had recently received threats in his address,” says one source familiar with the situation. “The last three months Gontareva was pouring a huge negative thread to work in this mode without leaving the “comfort zone”, it would be simply impossible,” — said the head of the Commission in banking analysis of Ukrainian society of financial analysts Vitaly Shapran.

“A brave woman against the bad guys”

Gontareva head of the national Bank in June 2014, and since that time Ukrainian hryvnia became cheaper by 56% and the refinancing rate of NBU reached 30%. According to Ukrainian opinion polls, for example the December survey of Fund “Democratic initiatives”, Gontareva was the most disliked among the population officer: she didn’t trust 80% of Ukrainians (more than Arseniy Yatsenyuk, Arsen Avakov or Alexander Turchinov). Having closed more than 80 banks, including the country’s largest private Privat, “zombie banks” and “banks.”, Gontareva became the enemy and for the local oligarchs, one of them “physically threatened” her in the building of the NBU, she said in a recent interview with the Financial Times (but the person’s name refused to name).

However, in the West Gontareva has achieved almost universal acceptance: it praised the IMF and other international institutions, positively the work of the head of the NBU estimate, and many economists, including Ukrainian. The British Ambassador in Kiev Judith Gough called Gontareva in his Twitter, “brave leader of transformation, which has carried out a real reform in the banking sector”. Agreed economist of a management company BlueBay Asset Management Timothy ash, the head of the NBU “brave woman” who “had a bad press mainly because of the bad guys, whose banks she was trying to clear”.

“What did Mrs. began to close the Ukrainian banks, despite the real pressure and threats, did not dare to do none of the men in this position,” — said the head of the expert analytical Council of the Ukrainian analytical center Boris Kushniruk. “Clearing the banking sector, she has made lots of enemies among the Ukrainian businessmen. Given that local media are often the same businessmen, the press was a lot of negativity towards her and some of the charges were strange or ridiculous,” confirms a senior economist at Raiffeisen Bank International, Central and Eastern Europe Andreas Schwab.

Women’s share

According to the official monetary and financial institutions (OMFIF), there are only 12 Central banks or their analogues, which are run by women, or 6.5% of the total. In some aspects of the tasks identified Gontareva, oddly enough, was similar to those facing the head of the Bank of Russia Elvira Nabiullina, says Schwabe from Raiffeisen: “zakalivanie” inflation (inflation expectations) and the clearing of the banking sector.

Devaluation was inevitable

During the reign of Gontareva, the NBU was the leader of the reformist changes in the financial sector, said the chief editor of the online economic publication VoxUkraine Boris Davidenko. “A change in monetary policy, the transparency of the banking system treatment of “zombie banks is” and “sinks”, a real historic event sector, the internal transformation of the NBU, and more”, — he enumerates in conversation with . Gontareva did a lot for clearing the banking sector from unreliable players who “have accumulated funds of citizens and take them nowhere”, says the Professor of Kyiv school of Economics Ivan KOMPAN, but the Central Bank fell accusations that he failed to keep the national currency.

When Gontareva the head of the Central Bank, the dollar was worth less than 12 UAH, and now the course is almost UAH 27. When Gontareva, the NBU has moved to a floating exchange rate with inflation targeting from the Bank, for years maintaining a fixed exchange rate. VoxUkraine economists believe that “it was a terrible choice of monetary and exchange rate policy for Ukraine”: due to policy of fixed exchange rate, relatively high inflation and falling prices for main export goods of Ukraine, the hryvnia became increasingly overvalued, and the NBU Gontareva to burning through their reserves in an attempt to protect the course (they declined from a peak of $38 billion in 2011 to $15.5 billion at the end of February 2014 and then even more). In a recession and military conflict in the East of the country, the national Bank of Ukraine “did the only possible thing: with reserves close to zero, it was necessary to allow the hryvnia to depreciate,” the economists believe.

Stuffed Valeria Gontareva in a coffin to protest in front of the national Bank of Ukraine. March 1, 2017

“Ukraine Valeria Gontareva criticized for a sharp devaluation of the hryvnia, which, in my opinion, groundless. Devaluation was the consequence of unstable fixed exchange rate, which was observed since 2008,” says senior Advisor to the EBRD in Eastern Europe and the Caucasus Anton Usov. In respect of the hryvnia, “not all the steps of the NBU can be considered intricate, but we must remember that actions were taken in a situation of chaos and panic on the banking market and in society in General,” says Kushniruk. “There is no stable currency with a very weak economy, with this point of view, the NBU could not in principle affect the containment rate”, — the expert emphasizes.

The main achievement

Cleaning the banking system of Ukraine — the main achievement Gontareva and her team, interviewed experts agree. According Shapran, Gontareva “has greatly shaken up the system”, clearly showing its problems — money laundering, insider lending and lack of responsibility of shareholders. A typical business group in Ukraine, worked on the financial model “to create a Bank, to collect deposits and use those deposits for lending to private businesses,” economists say VoxUkraine. After the national Bank has made mandatory the disclosure of the ultimate owners of banks, it became clear that the extent of lending to related parties is huge — up to 80% in some banks.

While Gontareva most of the time there was no political support from Prime Ministers and most members of Parliament, says Davidenko. Part of the reforms, which were conceived by her team, now blocked in Parliament a number of bills regularly is not gaining enough votes, adds Shapran. “To say that all the problems she was allowed, would not be true, most of them are still in the decision process, but they [hontareva and her team] have shown the relevance of wild places and the scale of these problems,” he says.

According to KOMPAN, Gontareva as the head of the NBU showed integrity and did not succumb to pressure, in particular in the issue of the inclusion of the printing press. During its work, avoid feeling that it is affiliated with any interest group, says the Company. “Under the leadership of the NBU Gontareva became the most independent in its history — said Ukrainian economist, Professor of Finance, University of Swansea (UK) and Oleksandr Talavera. She was free from the influence of interest groups, and it was enough power to nationalize Privat”.

Taruta against Gontareva

One of the most active Ukrainian politicians are criticizing Gontareva, became the Deputy of the Verkhovna Rada, co-owner of metallurgical Corporation “Industrial Union of Donbass” Sergey Taruta. He distributed a brochure entitled “Gontareva. The threat of economic security of Ukraine”. The citizens national Bank trust, the regulator does not manage the exchange rate, its policy leads to the collapse of the banking system, and hontareva involved in schemes for the withdrawal of funds from insolvent banks mentioned in the brochure. A separate section dealt with the corruption — Taruta has listed high-profile cases of theft from the Ukrainian banks and noted that they accused the leadership of the NBU, as such crimes could happen “only with the knowledge and assistance of” Gontareva. In the Ukrainian banking system is planned trend “a dangerous concentration of Russian state capital” as the reason for the close relationship of Finance with “an influential Russian financiers,” says the brochure. With reference to the documents of the Panama Mossack Fonseca it was argued that Gontareva allegedly tied to the first Deputy Chairman of VTB Yuri Soloviev. Charges Taruta for the most part contain true information, but was used “in a very manipulative form” indicated in the project VoxUkraine VoxCheck.

What will happen to Russian “daughters”?

The national Bank of Ukraine Gontareva in (it runs until may 10) as her successor will soon make the decision about the fate of the “daughters” of Russian banks in Ukraine. End its presence in the country through sale of subsidiary banks are Sberbank, VNESHECONOMBANK (his “daughter” Prominvestbank), and VTB. Moreover, the heads of all these banks has repeatedly stated that they are negotiating the sale of Ukrainian assets are in the final stage. Sberbank in late March announced that it agreed to sell Ukrainian subsidiary to a consortium of investors led by the Russian-British businessmen by Gregory Guselnikov and said Gutseriev (the transaction must obtain the approval of the NBU).

The interviewed experts agree that the withdrawal of Finance by itself will have no impact on the sale of Russian assets. “It’s a neutral event because the fate of Russian assets, including banking, the issue a higher political level, and the NBU is rather was the instrument of its realization, rather than a real decision-making authority,” — said the head of the group Finance ACRES Kirill Lukashuk. Still not closed the deal, Sberbank is political, the final decision will be made not only the NBU, but also at the level of the President and the national security Council of Ukraine, said Kushniruk.

“A solution must be found so that the image of the country has not suffered. It’s all understood. Confirmation of this, in particular, the output of today’s law enforcement officers to guard the offices of Sberbank,” — said one of the Ukrainian bankers familiar with the situation. A lot will depend on who will be appointed the next head of the NBU. “Many representatives of the Russian banks spoke Gontareva as a person who tried to balance the political aspects and professional approaches as possible. Now the big question is whether the new head of the NBU to follow professional standards or to succumb to the pressure of politicians,” — says the managing Director on Bank ratings “Expert RA” Stanislav Volkov.

Earlier the bankers who are negotiating the sale of Russian “daughters” in Ukraine, said that, “while the NBU Gontareva runs, they are quiet”. Critics Gontareva has repeatedly accused her in an effort to help the “daughters” of Russian banks, it cited that they have access to NBU refinancing. In February 2017, the Deputy of the Verkhovna Rada Ihor Lutsenko demanded Gontareva to comment on the information that she met with the head of Vnesheconombank Sergey Gorkov. After the pogroms of offices of Russian banks, the head of the NBU said that in favor of their civilized exit from the Ukrainian market.

Who is the successor?

Replaced Gontareva should come the one who will approve of both the President and Parliament, says Concorde Capital. Among the candidates whose names appeared in the media, — the head of “Raiffeisen Bank Aval” Vladimir Lavrenchuk, Advisor to the President of the Ukrainian Alfa-Bank Roman Shpek, head of the NBU Council Bohdan Danylyshyn, the head of the state-owned Ukreximbank and Alexander Gritsenko. With any successor, there is some risk consequently back the reformist agenda of the NBU, believes Andreas Schwabe from Raiffeisen. If a successor will be chosen from political expediency and not really independent, it will bring the risk of macrodistribution, said Davydenko of VoxUkraine. However, the economist Talavera believes that Gontareva probably confident in your changer or otherwise, would have waited with the decision to resign.

With the participation of Anton Feinberg, Oleg Makarov